Insuring the uninsurable...

The taxi industry in South Africa is widely regarded as volatile, extremely high risk and even uninsurable. Yet, over the last 18 years, Clarendon Transport Underwriters have proven that with sound underwriting and a strong broker network, even taxis can enjoy comprehensive cover that benefits all road users in the country.

Clarendon Transport Underwriters (CTU) commenced business 18 years ago, when very few, if any, players in the market were interested in serving the taxi industry. Established specifically to underwrite insurance for the taxi industry, CTU is now the leading provider of motor insurance for taxis and midi bus taxis in the emerging markets in South Africa.

Immense market

“There are currently 200 000 taxis on our roads and 70 000 of these are insured by CTU on a comprehensive basis, countrywide,” says Louis Fivaz, MD CTU. “Many taxi owners are unable to insure their taxis, due to the age of the vehicle and the fact that the average taxi does approximately 80 000 kms per year.”

The CTU cover is available to any taxi owner, whether a member of a taxi association or not. However, most of CTU’s clients belong to a taxi association. “We are in close contact with all the players the taxi industry. Because it is a very volatile industry, all the partners in the industry need to work together to make it profitable and successful,” says Fivaz.

Claims experience

CTU has paid out over a billion rand in claims since its inception, and says that the frequency of taxi claims is higher than the average claims frequency of other vehicles. “This is due to the fact that taxis are on the road 12 hours a day, and accidents rates are higher than other vehicles. The Toyota Hi-Ace is particularly in demand and has always been one of the vehicles more likely to be stolen,” explains Fivaz.

“Like most motor underwriters, our claims ratio for 2009 was on the high side and we therefore had to increase rates, to bring the ratios in line.”

Challenges

The biggest challenges for CTU are the cost of spares and repairs, and the increase in the frequency of claims, due to poor road conditions, such as traffic lights not working and potholes. CTU does checks on the drivers where possible, but due to the high turnover of drivers in the industry, it is extremely difficult to monitor.

Opportunities

CTU is focussed on being flexible to adapt its services and products to the changing demands of the industry. It now also plays a critical role in the financing of vehicles. “If the taxi is not insured, the owner will not get finance,” explains Fivaz.

“We are always looking for opportunities to develop new products which can better serve the industries needs. As such, we are launching a funeral policy with the help of our partners, and a credit life policy will be launched in the near future.”

Partnering with brokers

CTU has tapped into this market by building partnerships with its broker force. “Looking to the future, the biggest opportunity for CTU is the expansion of our broker force,” says Fivaz.

“We are very proud of our independent brokers, many who stem from previously disadvantaged backgrounds. We have brought in these brokers as partners and have helped grow them into successful entrepreneurs. CTU is very involved with social responsibility in the communities our brokers and clients stem from. We are continuously looking for partners who feel passionate about the taxi industry.”